Reporter

Manhattan real estate suffered its worst year since the housing crash of 2009, as tax changes, stock-market turmoil and jittery foreign buyers hurt sales in 2018.

Home sales in Manhattan fell 14 percent last year, the industry’s steepest drop since 2009, according to a report from Manhattan real estate companies Douglas Elliman and Miller Samuel. In the fourth quarter, the median price for an apartment in New York City fell below $1 million for the first time in three years. And the decline in sales in the fourth quarter was the fifth-straight quarterly drop.

“What we saw was a big wet blanket thrown over the market in 2018,” said Jonathan Miller, CEO of appraisal firm Miller Samuel.

Miller said 2019 is unlikely to improve, even though the drops may not be as severe as 2018. Manhattan real estate has been hurt by a convergence of economic forces. An oversupply of high-end apartments, especially new condo towers, hit the high end of the market. At the same time, demand from foreign buyers cooled as new rules aimed at money laundering took effect and overseas economies began to slow.

The new tax law, which limits the deductibility of state and local taxes, also hurt demand for real estate in high-tax cities like New York.

Volatile stock markets at the end of the year are expected to keep buyers on the sidelines for at least the beginning of 2019. While prices and sales could continue to fall in 2019, the decline won’t likely be as steep as it was in 2018, Miller said.

“We’re going to see continued weakness, but it will be a more moderate decline,” he said. “I think most of the heavy lifting was done in 2018.”

Miller said that while the “starter market” in Manhattan — studio and one-bedroom apartments — was weak last year, it will likely hold up better than the luxury market, with homes priced at $7 million to $10 million or more. There is now a 16-month supply of homes in the Manhattan luxury segment, defined as the top 10 percent of the market by price.

“I don’t think the luxury market will change all that much,” he said.

But don’t expect any real bargains anytime soon. The average price of a Manhattan apartment is still just under $2 million. The average price per square foot is now at $1,684.

Property technology will drive investments in real estate, especially the residential sub-sector, this year, a new report has said.

In its 2019 Nigeria Real Estate Market Outlook, Northcourt, a real estate investment and research company, said the industry would see more supply across the various sub-sectors but with varying levels of demand.

According to the report, the developments will be driven by new technologies, and both the government and private developers will be more innovative in products delivery.

The report added, “The residential market will see more partnerships involving Proptech firms and the introduction of data-driven products and services. Well put together property startups are raising funds from local and foreign investors who are not averse to potential risks-vis-a vis the high yields obtainable.

“The Federal government, coming to terms with the impact of housing will begin delivery from adopting a number of models.”

It stated that landlords would also be more open to nil increases and slight reductions in rent renewals as tenants wait till after the elections to make major property decisions.

“2019 will see a boom for the savvy real estate investor,” the report added.

According to the report, the provision of housing units by the Family Homes Fund and the Federal Housing Authority in Nasarawa, Ogun, Delta and Kano states and parts of Abuja is expected to be more visible this year and will assist in reducing the deficit.

It stated that land authorities would be resolving zoning infractions to create opportunities for residential development, adding that there were indications that the originally residential areas of Lekki Phase 1 in Lagos, which is fast becoming commercial, would be returned to its original use in 2019.

It added that eight states – Akwa Ibom, Benue, Cross River, Edo, Gombe, Kebbi, Kogi and Plateau were working on making homeownership easy for their indigenes, and were expected to conclude the process of adopting the Model Mortgage and Foreclosure Law soon, while Ogun State awaits the governor’s approval.

“Lagos and Kaduna states have enacted mortgage model laws unique to their circumstances,” it said.

The Federal Government on Thursday gave marching orders to the contractor handling the Lagos-Ibadan rail line to deliver the Iju (Lagos) to Agbado (Ogun) section of the project within the next two weeks.

It stated that although there had been a considerable improvement on the project, it was important to get the Iju-Agbado section ready this month as commercial activities were more pronounced on the specified location.

This came as the renowned economist and Chief Executive of Financial Derivatives Company, Bismarck Rewane, stated that the Lagos-Ibadan rail project would reduce inflationary pressures when completed.

The Minister of Transportation, Rotimi Amaechi, directed officials of the China Civil Engineering Construction Company to speed up work on the Iju-Agbado section of the project and get it ready for test-run in two weeks.

Amaechi said, “Getting to Abeokuta, you will see that there’s an improvement but the problem they have now is the civil work between Agbado and Iju which is critical to me because I don’t think passengers will go to Agbado to join the train.

“I believe that the closer we are to Lagos, the better for the rail and that is why I had to tell them to tell me what they will do about this before the next two weeks, although there’s a huge improvement up to this point. I want them to speed up the construction from Iju to Agbado.”

On why the contractor had yet to bring in more equipment to hasten the pace of work, the minister stated that the excuse given by the firm was that the equipment was not off-the-shelf machines that could be moved easily to Nigeria from abroad.

He also stated that the project would reduce congestion at the Lagos sea port.

Amaechi said, “Part of the solution to the congestion around Lagos sea port is an efficient rail line. You can argue that the narrow gauge is there but it is not efficient. But the moment you fix this then those goods will be transferred to the rail and then the logjam will disappear.

“The moment we do the section from Iju to the seaport, then most of those goods, especially the ones going to Ibadan will be on the rail lines.”

When asked whether the government was being pressured by Nigerians to complete the rail project, Amaechi replied, “Of course, and it is also because of the speed, for it takes you about 30 minutes by rail from Lagos to Ibadan as against over one hour by road. And this is subsidised.”

Explaining some of the impacts of the project on the economy, Rewane said, “This is a massive project that will have a multiplier effect when completed and will reduce logistics and distribution cost, which are the major areas of inflationary pressures in Nigeria. So I think we should give them time to complete it because it will increase productivity and reduce cost.

“It will reduce inflationary pressures because the cost of moving goods from point A to B will be reduced since you are not coming by road. So that is a good way to reduce the pressure and inflation is one of the core economic concerns for Nigeria. Therefore, anything that can reduce inflation is good for the country.”

There is noticeable slowdown of the nation’s real estate industry that has affected its contribution to the nation’s GDP, but on the flip side, the facilities management sector has witnessed rapid expansion.

Balogun shared some insights on the economy, the Real Estate industry, Facilities Management sector and on his Company – Global PFI Ltd. He stated that “The Real Estate industry has continued to slow down largely due to oversupply in commercial and retail sectors, inappropriate supply in the residential sector. The latest GDP figure shows negative growth of -2.68% at the end of October 2018 and the Q3 contribution to GDP dropped from 7.09% in Q2 to 6.88% in Q3.”

However, he said the facilities management sector “is rapidly expanding globally, regionally and locally with growing awareness, acceptance and the global market is changing with global players strengthening their presence in Africa with merges and partnerships. Clients expectation has increased and demand for FM value has also increased away from service.

“The out – going year will also go down as a significant year for the sector with the launch of the 4 FM ISO standards, ISO 41011:2017, 41012:2017, 41013:2017 and 41001:2018; to ensure uniformity in the way FM is seen, appreciated, valued and implemented by both clients and providers, with the new FM definition which states that FM is an organisation function which integrates people, place and process within the built environment with the purpose of improving the quality of life of people and productivity of the core business.”

On activities in the sector, he said “In Nigeria, we launched the National FM body – Association of FM Practitioners Nigeria, AFMPN, the final approval of the FM bill 2018, as well as the Federal Ministry Power, Works and Housing’s draft National Policy on Maintenance of Public.”

Giving his company’s background, he said “Global Property & Facilities International Ltd – GPFI, was established about 18years ago as the first fully defined and classified Facilities Management company in Nigeria. The company has over the years evolved through mergers, acquisitions, and share restructuring, from her humble beginning as FMC (Facilities Management Company of Nigeria) to WSP FMC after the partnership with WSP, the Global Engineering company, merger with Domme FM Ltd in 2012 and change of name in 2014 to Global Property and Facilities Management Limited.

“The company is gradually becoming a Pan African company with operations in major Africa cities of Nigeria, Ghana, Cote d’ Ivoire, Cameroon and Kenya. We are an ISO 2008:2015 certified company. We remain committed to providing world class real estate service to our clients all over Africa.

“As a company, we have grown well, improved, created new solutions, innovative ideas and support for our clients, suppliers and put our employees at the highest level of focus. We have created and sustained the following industry initiatives; Newsletter – Bringing global and local FM knowledge, news and ideas to Africa; Academy – ProFM Credential Africa center; Technical Training; Support for Industry; Social impact initiative; Creating maintenance economy; Introduced robots across all our work scope; Cleaning; Swimming pool Management; Gardening etc.”

The company, he said has also received some Awards, stating that “As a company, we have been recognized as the best FM company in 2018 in the following categories; Best Property & FM Company of the year 2018–Acquisition International, London; Best FM Company of the year 2018 – Real Estate Excellence Awards; Global Leading Quality FM & Infrastructure of the Year 2018 – Global Quality Awards; and Africa’s Most Innovative Leading FM company of the Year 2018 – Awesome Awards.

“As well as our CEO, in the following categories; Best FM CEO Award in Nigeria 2018 – AIA of London; Best FM CEO of the Year 2018 – Real Estate Excellence Awards; African FM Personality of the year 2018 – African Institute Leadership Excellence

“We will continue to drive the industry in Africa to attain Global standard through our work, learning and development, information sharing, conferences and seminar engagement etc.,” he said.

An expert in real estate has said that for the industry to grow and contribute more to national development there is an urgent need for restructuring, not by the government but by practitioners themselves.

He added that the industry was plagued with a structural problem that stakeholders could deal with, without the government.

This was the view of the Group Managing Director and Chief Executive Officer, Global Property & Facilities International Limited, Dr MKO Balogun, who equally noted that stakeholders must take the lead in revolutionizing the real estate industry, before engaging the government on infrastructure.

“Those of us in the industry need to think beyond just building. We need to allow the economy grow normally. Developing places without people to take them up is like forcing the economy to grow. Our sector has not grown in the last three years, it has been negative but with the money that has been invested, we expect it to contribute more to the economy but we are not seeing that,” he said.

Balogun explained that for a long time, developers had placed emphasis on supply-led housing development which had continued to cripple the economy by tying down investments in the industry while the country’s housing deficit continued to rise.

Stakeholders had constantly decried the glut in the property market while the number of those who really need accommodation continues to rise.

According to Balogun, in the last two years, there has been an oversupply of properties in major cities of the country, especially luxury development without a commensurate disposable income to take them up.

He stated that according to findings, more than 60 per cent of those who need housing, do not need luxury homes but require compact and functional homes such as one and two bedroom apartments.

He said, “We have more houses in Lagos than is required, there are more offices than people need. We have had an oversupply of three and four bedrooms. One thing we have not learnt as a people is that we need to create a pipeline, create one and two bedroom apartments so that these will graduate to two and three bedrooms and another set will move into the one and two.

“For instance, a young person who has just got a job can move into one, when he gets married he moves into two and when his family begins to grow, he goes to three. We have 90 per cent of residential as three and four bedroom houses, whereas the demand on residential for one and two bedrooms is more than 60 per cent. If we don’t address that, we will just continue to invest in property that will lie fallow.”

He said developers were also not tying real estate development to infrastructure, adding that most people develop without consideration for potential growth of the area.

“We are all complaining about gridlock in Lagos. One of the things I have noticed around the Lekki/Epe Express way is that all the major developments are around the traffic point, because developers are not paying attention to growing population and government plans. When you develop a place, you think of projected users but that was not factored in on the Lekki/Epe corridor so we have a lot of residential developments creating traffic bottleneck in the area which impacts the economy because of lost man hour,” he said.

On the retail side, Balogun said there had been massive development but with less focus on functionality.

“The retail market started aggressively but what we are doing is copy and paste, unfortunately most of the people we copy from do community malls. You can’t build big malls in the middle of nowhere and expect to have full occupancy. The challenge with the industry is there are a lot of vacant properties and funds are being tied down, so there is no way the economy can feel the impact,” he said.

He added that office development had also not fared as high grade office buildings in major cities had remained vacant while others had low occupancy.

He said, “We have not learnt our lessons, we continue to do the same thing and continue to get the same results. What we need to do is to have a rethink, we should build to fulfil demand not just build because the money is available, the economy will not reflect the investment in the real estate industry if we don’t change these things.

The federation’s report adds that the permissions were on 21,848 different sites which is the highest ‘moving annual total’ since the series started in 2006, and says that “spreading” housing across an increased number of sites enables more SME builders to contribute to solving the nation’s housing shortage.

The firm says that builders are continuing to invest heavily in the people, supply chain and new technologies, although there is concern for the economy, confidence of new buyers and access to skilled foreign workers among the looming effect of Brexit.

HBF executive chairman Stewart Baseley says: “The industry has delivered unprecedented increases in housing supply over recent years and is continuing to invest heavily in the land and people needed to go further.

“The recent confirmation of an extension to the HTB scheme provides further certainty and confidence for builders in future demand.

“This is enabling them to invest in more sites, their supply chains and recruit and train more people, boosting local economies across the country.

“The industry continues to push government for confirmation that it will have ongoing access to skilled labour from abroad post Brexit, which will be key to its ability to build out these sites.”

Jibril, who spoke to our correspondent in Abuja after he was sworn in as the new chairman of the institute, said, “The challenge we have is that in other cities outside Abuja, in fact, in the whole of Nigeria, we have less than 10 per cent of Nigerian cities that have master plan. They lack proper guidance for the implementation of physical planning development.

“We have less than 10 per cent of them that have a master plan and that is a major challenge for us. Most of the state capitals don’t abide by the provisions of the Urban Regional Planning Law. They give no regard to this law and this is unfortunate.”

He added, “Most of the politicians in these states have no regard for that law. They don’t involve planners in the development of their states. So also the followers; people just buy land and start developing it without following due process and this is why we have challenges such as flooding.”

When asked whether the situation could be corrected, Jibril replied, “Yes it can, but there has to be a strong political will to make this happen. We are making effort and that is why the national body of the NITP organises three national workshops in three geopolitical zones.

“We visit state governors, enlighten them on why they have to plan and invite them to our programmes, as well as look at contemporary issues within the region and see how to address them for better development.”

Jibril described the institute as a training ground and research centre for all professionals who practise town planning in Nigeria.

He further noted that the improper construction of houses in cities across the country had been an issue of concern to town planners.

“This is because town planning is all about ensuring efficiency and effectiveness in people’s ways of life in relation to their places of living, places of work, educational, health and other activities. This is a major concern to town planners,” he said.

Jibril noted that the institute was working hard to address the issues, adding that the NITP was liaising with all the directors in charge of town planning, particularly in the FCT, to check the improper construction of buildings.

He, however, stated that the institute could not force people to stop the improper erection of structures, rather it would continue to educate citizens on how to properly plan their cities.

VICE President Yemi Osinbajo has said that the President Muhammadu Buhari’s administration had spent a total of N2.7 trillion on infrastructure since assumption in office, adding that the Federal Government was committed to ensuring that money belonging to Nigerians are not stolen but used for nation building.

Vice President Yemi Osinbajo further hinted that the country was earning 60 per cent less than what it was earning in the past 10 years, adding that despite this low earning, the current administration has spent more in building infrastructure than any other government in the country today.

Buhari’s reelection, sure ticket for Yoruba in 2023 – Osinbajo The Vice President made the disclosure at the palace of the Ovie of Ughelli, Oharisi III during a courtesy visit to the monarch on the enumeration exercise of the Trader Moni Scheme in the Ughelli main market which will commence disbursement in January, 2019 with 30,000 beneficiaries getting N10,000 each.

Deji Adeyanju’s detention till February worrisome, intervene; Imagwe begs NJC “Today, N2.7trillion is what we are spending on building infrastructure. The question we ought to ask previous government is, where were they? What did they do with the money if today we are still building the Itakpe-Warri railway line which was established 35years ago as well as the Kaduna Hydro project which also was established 40years ago?,” he stated.

The Chairman, Lekki Residents Association, Lagos State, Mr Kayode Otitoju, has called on the Federal Government to consider the plight of the aged by building elderly people’s homes across the local government areas of the country.

Otitoju, a former Commissioner for Information and Culture in Ekiti State, made the call on Saturday during the recognition and awards of 30 octogenarians plus residing in Lekki Peninsula in an event entitled, ‘Old Skool – Glitz and Glamour.’

He said the building of the elderly homes in the country had become imperative because many elderly persons were abandoned.

He stated, “In Nigeria, we do not have old people’s homes. Those in government, particularly those in the legislature, should make case for the aged in the country.

“Government should know that the octogenarians plus and the aged are people who have seen it all. Government will do well if they move closer to them, seek advice, some of them that are up to 90 and are still consultants in their callings. Government should have policy for the aged to give them a sense of belonging.

“In that policy, what should be contained is welfare. In Ekiti State, when Kayode Fayemi was there in his first term, he instituted a policy whereby old people were given N5, 000 each per month. You may think it is small, but it is something for people who are no more productive in terms of economic production.

“Then again, the old people’s home is essential. There are some old persons who are abandoned and such people will feel comfortable with such a home. This should be replicated in all the local government areas in the country.”

Otitoju, who said Lekki is a melting pot in the country, said the awards and recognition were organised to commemorate those who were up to 80 years and above living in the estate, saying that people within the age bracket were usually relegated to the background.

He said, “We decided to honour the octogenarians plus because people within this age bracket are relegated to the background; people do not remember them anymore and they too can’t be as mobile as when they were young.

“We now said if despite the problem of electricity, the problem of water and other issues, these octogenarians plus can still manage here with us, instead of running to the village where life is serene and quiet, we should celebrate them.”

Faced with over 17 million housing deficits and 108 million Nigerians estimated to be homeless, based on an average family of six people per housing unit, the country is in dire need of solutions to its huge housing needs.

Expectedly, professionals in the sector are looked up to, in mapping out strategies for mitigating shortfalls in the sector. However, the evolution of specialization in the industry has brought about inter-professional rivalry among the key players in the sector.

Regrettably, instead of prompting increased development, there has been concerns as to who does what and who is not trained to carry out a particular responsibility.

According to sector’s observers, intra-industry rivalry among the players has slowed down expected growth.

Currently, the seven recognised professional bodies in the built environment include, the Estate Surveyors and Valuers, Nigerian Institute of Quantity Surveyors, Nigerian Institute of Building, Nigerian Society of Engineers, Nigerian Institution of Town Planners, the Nigerian Institute of Architects and the Nigerian Institution of Surveyors.

Overtime, there has been issues of overlapping of roles and responsibilities which require finding a common ground on such peculiar matters.

For instance, the Quantity Surveyor is a specialist in cost related matters as well as in feasibility studies and labour costs.

But engineers could also handle these jobs especially, when quantity surveying is seen as a branch of cost engineering and part of International Cost Engineering council. Another area of contention is on the issue of professional competence on plant, equipment and machinery (PEM) valuation. The profession duly recognized by law to carry out valuation of all assets and produce a value is estate surveying and valuation.

The scope of valuation includes, lands and buildings, furniture and fittings, office equipment, plant, equipment and machinery. The inclusion of the latter in the valuers scope of work is the causative factor of the feud.

President of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Rowland Abonta said members of the institution are the only professional body enabled by Nigerian law to practice valuation and put stamp and seal concerning the value of any kind of assets.

He said over many years ago, the engineers had threw up a challenge wanting to do valuation explaining that the challenge first came up in their attempt to do NEPA asset valuation but the matter was taken up to General Kontagora, who was then the minister of Works, Power and Housing.

He noted that the ministry had to seek the view of the Royal Institute of Chartered Surveyors’ (RICS) to confirm who has the professional capacity to carry out valuation.

“The RICS, then confirmed that it is the members of the Nigerian Institution of Estate Surveyors and Valuers that are registered are the ones empowered to put value on any asset”, he said.

Abonta observed that the best engineers could do is to provide what is called, a technical report on ‘Plants and Equipment’ which would be interpreted and be made use of in arriving as to the value of assets.

Mr. Victor Adekunle Alonge, the Chairman of the Abuja branch of the Institute of Directors (IoD) and the chairman, Professional Practice Committee, Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON), supported Abonta’s position.

According to him, engineers cannot be valuers as they are not trained to be, estate surveyors and valuers will not be engineers, so engineers can never be valuers.

Alonge, who spoke recently with The Guardian, said as far as the law is concerned, the only profession entitled to actually put value on assets, whether engineering or power and marine assets is the estate surveyors and valuers.

According to him, the turf is wide enough for all of us to practice and collaborate. No profession can exist in isolation. We need to work together.

He said, “There is no absolute reason why engineers should continue to dissipate energy unnecessarily on this issue, rather they should start looking at how we can work together to optimize the value of our national assets for the benefit of the people”.

But the immediate past president of Nigerian Society of Engineers (NSE), Mr. Anyaeji Otis said the problem with NIESV has been on since early 2000.

He said: “ We have been having issues because they feel that engineers should not do valuation. But the law says otherwise. The law recognises engineers as valuers. If you go to Companies and Allied Matters Act (CAMA) Section 137 it is there. Section 137 of the law describes professionals, who are valuers as accountants, surveyors, engineers and auditors.

If you also go to Engineers Act, the description of practice of engineers, valuation is also there. When we actually took the matter to Association of Professional Bodies of Nigeria (APBN), they eventually ruled that there is no exclusivity in terms of any of those professions mentioned in the law. That all of them have the right in those perspective specialised areas. So they felt not satisfied with that but that is not what we go by, we go by what the law says”, he added.

In a tacit acquiescence with Otis’ position, a former Chairman of the Apapa Branch of NSE, Dr. Ombugadu Garba noted, “As a professional Engineer, you know that an estate developer cannot value equipment. When you give an estate surveyor and valuer, an equipment to value, he might not be able to understand the real value of that equipment because he doesn’t have the required engineering knowledge.

On costing, Otis said when it comes to highways, railways, airports, refineries, sewage plants, electrical and plumbing works in the building, it is the engineers that estimate those costs. “Even quantity surveyors are not even brought in properly even in their own areas when all these costs are determined. Economists just do what they have to do. The thing is that economist does not estimate projects cost, it is the engineer that estimates project cost and where buildings are concerned, and quantity surveyors are involved”, he said.

The Institute of Appraisers and Cost Engineers, he said, are to advise on the practices of engineering valuation, which has to do with estimating worth of property, roads, and others. They also have the mandate for cost engineering, which has to do with estimating new projects, new equipment and also doing project cost, planning and scheduling for such projects and engineering economy. Of course, appraiser means valuer”, he added.

Speaking on the issue, the Chairman, Lagos Chapter of NIQS, Ayuba Akere said efforts are being made to ensure that there is peace and harmony among professionals in the built environment. According to him, all professionals are united under an umbrella called, the Association of Professional Bodies of Nigeria (APBN).

He said, “The main aim here is to have a common voice to tackle issues of national interest. That can only be achieved if there is harmony within professionals of different backgrounds. Acrimony can be seen if one professional group is trying to do the work of another group. Rather than looking for areas of conflict, what we should be clamouring for should be how to jointly face challenges that are of common interest to all professionals thereby ensuring that each professional group remains relevant and none goes into extinction”.

He stated that the core duties of each professional group are now available at almost next to nothing on online.

“A touch on relevant applications will give you desired results”, he added.